On February 14, 1984 summary judgment was granted against Mme. Paulette Dry Cleaners ("Mme. Paulette"), Noubar Mahdessian and Ann Mahdessian for violation of, inter alia, Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. ("Title VII") and the Fair Labor Standards Act of 1938, as amended by the Equal Pay Act of 1963, 29 U.S.C. §§ 201 et seq. ("FLSA")
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substantially on the basis of the defendants' admissions that they altered the conditions of Fannie Sims' employment as a "presser" and ultimately discharged her because she filed a sex discrimination complaint against them with the Equal Employment Opportunity Commission ("EEOC"). Sims v. Mme. Paulette Dry Cleaners, 580 F. Supp. 593 (S.D.N.Y. 1984). Sims seeks to recover $33,378.50 from the defendants for their retaliatory acts. Specifically, Sims seeks $13,270.25 in backpay, $13,270.25 in liquidated damages, $6,838.00 in front pay in lieu of reinstatement, and an unspecified amount in prejudgment interest and attorneys' fees.

I. Service of Process

Ann and Noubar Mahdessian assert that the court lacks personal jurisdiction over them because they were not properly served. Sims filed the Complaint in this action on August 20, 1982. According to the detailed affidavit of the process server hired by Sims, Ann and Noubar Mahdessian were personally served at their place of business on August 20, 1982. After the defendants raised improper service as an affirmative defense in their September 10, 1982 Answer to the Complaint, Ann Mahdessian was served a second time at her place of business on September 16, 1982 and Noubar Mahdessian was served in his home on September 29, 1982. The Mahdessians deny that they were served.

We do not reach this factual dispute between the parties because we find that the defendants have waived the right to assert improper service as a defense.

A hearing solely on the issue of damages was scheduled for April 22, 1985. On April 19, 1985 defendants untimely submitted a pretrial order and brief which raised the question of improper service for the first time since the defense was asserted in the 1982 Answer. The pretrial order stated only that "the action must be dismissed for failure to comply with Rule 4. Rules Civil Practice, U.S.D.C." The defendants did not give any basis for the assertion or make any offer of proof in their pretrial papers, nor had they done so at any time prior to the hearing.

The hearing as to damages went forward on the scheduled date. However, defendants were instructed to include with their post-trial briefs an offer of proof addressed to the issue of the court's personal jurisdiction if they could do so in good faith. Thereafter, the defendants submitted affidavits denying that the Mahdessians were ever personally served.

It is well settled that lack of personal jurisdiction is a privileged defense that can be waived "by failure [to] assert [it] seasonably, by formal submission in a cause, or by submission through conduct." Neirbo Co. v. Bethlehem Corp., 308 U.S. 165, 168, 60 S. Ct. 153, 155, 84 L. Ed. 167 (1939); see Marcial Ucin, S.A. v. S.S. Galicia, 723 F.2d 994, 996 (1st Cir. 1983). Although Rule 12(h)(1) does not provide a time limit for contesting service of process, other than the 20-day period for filing a responsive pleading, the defense must be made in a reasonably timely manner or it is waived [further citations omitted].

In Burton, the plaintiffs moved to strike the allegations in the Answer of improper service on the ground that the defendants had waived the defense. The motion was granted. The court found that the defendants' conduct in failing to avail themselves of opportunities to contest the sufficiency of service of process in the three and one-half years that the action was pending, consenting to a change of venue from Connecticut to the Southern District of New York, participating in extensive discovery, and the fact that defendants previously had moved to dismiss a portion of the complaint without raising the sufficiency of service issue, was inconsistent with the defendants' assertion that the court lacked jurisdiction. The Burton court stated:

Defendants have literally complied with Rule 12(h)(1) by asserting the defense of lack of jurisdiction in their answers. These responsive pleadings, however, do not preserve the defense in perpetuity. Defendants are required at some point to raise the issue by motion for the court's determination. After preserving the jurisdictional defense in their answers, defendants should have sought discovery immediately to ascertain whether service was proper. If they discovered that service was not proper, defendants should have moved at the earliest possible opportunity to dismiss the complaint.

Id. at 481; accord Vozeh v. Good Samaritan Hospital, 84 F.R.D. 143, 144 (S.D.N.Y. 1979) (court held motion to dismiss the complaint barred by laches and waiver where there was a two-year lapse between the Answer asserting improper service and the motion to dismiss); see also Merz v. Hemmerle, 90 F.R.D. 566 (E.D.N.Y. 1981) (finding defendant waived her otherwise timely objection to manner in which process was served when she filed cross claim and later obtained court's approval to file third-party claim).

We find this reasoning sound as well as relevant to the case at hand. Although the defendants raised the improper service issue in their 1982 Answer, they did not again address the subject until the eve of trial. In the interim, Sims again served the Complaint and prepared for the hearing with no knowledge that the defendants still contested the sufficiency of service until she received the defendants' pretrial papers.

A finding of waiver is particularly appropriate in this case because the Mahdessians actively defended this lawsuit on the merits by responding to Sims' motion for summary judgment. It is significant that the defendants did not cross-move to dismiss the complaint or otherwise raise improper service before, or at the time that they answered Sims' motion.
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There can be little doubt that the assertion of improper service in an Answer does not entitle a defendant to wait until an adverse verdict has been rendered by either a jury or the court and then move to dismiss the complaint for insufficient service. The fact that the decision against the defendants in this case was rendered on the basis of a summary judgment motion, rather than after a hearing, does not compel a contrary conclusion. Accordingly, we conclude that the defendants' defending the lawsuit on the merits and their failure to timely file a motion to dismiss waived their right to assert the defense of improper service.

II. Damages

At the April 22 hearing, Sims' testimony and related documentation established the following undisputed facts. After her discharge from Mme. Paulette's, Sims was unemployed from approximately May 1, 1982 to mid-July, 1983, except for a three-month period during which she was employed by Faust Brothers Dry Cleaners ("Faust Brothers") and rare occasions when Sims was able to find "day work." In mid-July 1983, Sims obtained employment as a presser at Cadillac Cleaners ("Cadillac"), where she is presently employed.

Sims was earning approximately $263 per week at Mme. Paulette prior to her termination. She earned $11,476
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at Cadillac in 1983. As to Sims' earnings during her sixty-three week period of unemployment, Sims earned $2,999 from Faust Brothers and approximately $300 doing day work. In addition, Sims collected unemployment compensation both before and after she worked at Faust Brothers, with the exception of a two-week period in August 1982 during which Sims went to Hawaii. Sims collected a total sum of $2,233 in unemployment benefits.

Both parties agree that Sims is not entitled to backpay for the two weeks that Sims was in Hawaii, and that the wages which Sims earned by doing day work and from Faust Brothers must be deducted from any backpay award. However, defendants argue that Sims is not entitled to any backpay, nor to front pay or liquidated damages. For the reasons set forth below we conclude that Sims is entitled to ...

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